Free guide for contractors
Do contractors charge sales tax in Illinois?
General information, not tax advice. Tax rules change and depend on the details of each job. Confirm how they apply to your business with your accountant or the state's revenue department before relying on them.
IL Illinois
Usually no tax on the invoiceUsually no. Illinois contractors owe use tax on materials built into real estate and charge the customer none for them.
Illinois makes a construction contractor owe use tax on the cost of property it incorporates into real estate. Built-in items, such as plumbing, heating and ventilation systems, water heaters and cabinets built into the structure, fall under this rule.
Items that stay movable are taxable retail sales: finished appliances such as stoves, refrigerators and washing machines, furniture, curtains and drapes, and floor covering that is not permanently fixed. Anything sold without installation is taxable too.
Voice, data, video, security and telecom systems sold at one contract price carry use tax for the contractor rather than a retail tax on the sale.
It turns on: whether the item is built in or stays movable; whether items are sold without installation.
Watch out for
- Floor covering fixed with tack strips counts as permanently affixed; area rugs and covering held only by two-sided tape do not (86 Ill. Adm. Code 130.1940(c)(1)).
- When a taxable item is not priced separately, the tax is figured on the contractor's cost; when it is, on the amount charged but not less than cost (86 Ill. Adm. Code 130.1940(b)(4)).
- Plants, sod and seed planted in the ground are not taxable sales; plants sold in pots without planting are (86 Ill. Adm. Code 130.1940(c)(2)).
“The construction contractor incurs Use Tax on the cost price of the tangible personal property”86 Ill. Adm. Code 130.1940(c)